13th Jun 2006 07:00
Royal Bank of Scotland Group PLC13 June 2006 THE ROYAL BANK OF SCOTLAND GROUP PLC Pre-close Trading Update 13 June 2006 Introduction The Royal Bank of Scotland Group ('RBS') will be holding discussions withanalysts and investors ahead of its close period for the half year ending 30June 2006. This statement sets out the information that will be covered in thosediscussions. Summary RBS has performed well in the first half of 2006 and our interim results, whichwill be released on 4 August, are anticipated to be in line with expectations.Highlights of our interim results for 2006 are expected to include good organicgrowth in income, disciplined expense control and a small improvement in overallcredit metrics. Income and Margins Income: The Group has continued to achieve good growth in income, with strongperformances in Corporate Markets, particularly Global Banking & Markets, andUlster Bank. Retail Markets' income growth reflects the continuing transition inUK customer behaviour away from unsecured lending towards savings and investmentproducts, with Wealth Management performing particularly well. RBS Insurance hascontinued to increase its income in competitive conditions. Citizens hasachieved good growth in its business activities but the increase in its incomein US dollars has been constrained by the continuing impact of the flatter yieldcurve. Group non-interest income is in line to account for over 60% of totalincome. Margins: The Group's net interest margin is expected to be lower, in line withguidance given at our results presentation in February, mainly as a result ofchanges in the product mix and the continuing impact of the flatter yield curvein the US. The risk-adjusted return on the Group's portfolio remains attractive. Expenses The Group has maintained its disciplined approach to expense management. Whilemaking investments to support future growth, the Group continues to benefit fromits scalable operating platform and the resulting productivity gains. Credit Overall credit metrics are expected to show a small improvement, with growth inimpairment losses lower than growth in loans and advances. Impairment losses inRetail Markets are in line with the volume growth in personal unsecured lendingover the past two to three years and the seasoning of these portfolios.Corporate credit conditions remain benign. Capital During the first half of 2006 the Group has paid the final dividend for 2005 of£1.7 billion and has commenced its £1 billion share buy-back programme. Stronggrowth in loan origination has been complemented by the Group's increasingdistribution capabilities and it is anticipated that the Group's Tier 1 capitalratio at the end of June will be around the middle of the 7% to 8% range, asindicated at the time of our results in February. Sir Fred Goodwin, Group Chief Executive, commented: "Organic growth has been a key element of the Group's strategy and a prominenttheme in our results over recent years. 2006 is progressing well, and we areconfident that our interim results will clearly demonstrate the inherentstrength of our business model, the benefits of our diversified businessactivities, and the range of options available to us for future organic growth." CONTACTS Sir Fred Goodwin Group Chief Executive 0131 523 2203Guy Whittaker Group Finance Director 0131 523 2028Richard O'Connor Head of Investor Relations 0131 626 1014 0207 672 1758For media enquiriesHoward Moody Group Director, Communications 0131 523 2056 Unless otherwise stated, comments on trends contained in this statement refer tothe results for the half year ending 30 June 2006 compared with the equivalentperiod in 2005. This announcement contains forward looking statements, including such statementswithin the meaning of Section 27A of the US Securities Act of 1933 and Section21E of the Securities Exchange Act of 1934. These statements concern or mayaffect future matters, such as RBS's future economic results, business plans andstrategies, and are based upon the current expectations of the directors. Theyare subject to a number of risks and uncertainties that might cause actualresults and events to differ materially from the expectations expressed in theforward looking statements. Factors that could cause or contribute todifferences in current expectations include, but are not limited to, regulatorydevelopments, competitive conditions, technological developments and generaleconomic conditions. These factors risks and uncertainties are discussed inRBS's SEC filings, including, but not limited to, RBS's report on Form 6-Kcontaining this announcement and certain sections of RBS's Annual Report on Form20-F. Information in this announcement of the price at which investments havebeen bought or sold in the past or the yield on investments cannot be reliedupon as a guide to future performance. RBS assumes no responsibility to updateany of the forward looking statements contained in this announcement. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
RBS.L